Increased leukocyte elastase activity in mice lacking secretory leukocyte protease inhibitor (SLPI) leads to impaired wound healing due to enhanced activity of TGFβ and perhaps additional mechanisms. Proepithelin (PEPI), an epithelial growth factor, can be converted to epithelins (EPIs) in vivo by unknown mechanisms with unknown consequences. We found that PEPI and EPIs exert opposing activities. EPIs inhibit the growth of epithelial cells but induce them to secrete the neutrophil attractant IL-8, while PEPI blocks neutrophil activation by tumor necrosis factor, preventing release of oxidants and proteases. SLPI and PEPI form complexes, preventing elastase from converting PEPI to EPIs. Supplying PEPI corrects the wound-healing defect in SLPI null mice. Thus, SLPI/elastase act via PEPI/EPIs to operate a switch at the interface between innate immunity and wound healing.